When Using the Percentage-Of-Completion Method of Accounting for Long-Term Contracts

question 41

Multiple Choice

When using the percentage-of-completion method of accounting for long-term contracts, the percentage of completion used to recognize gross profit in the first year usually is determined by measuring:

• A)Costs incurred in the first year, divided by estimated remaining costs to complete the project.
• B)Costs incurred in first year, divided by estimated total costs of the completed project.
• C)Costs incurred in first year, divided by estimated gross profit.
• D)None of these is correct.

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Definitions:

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